Beneficial Ownership Information (BOI) Report Due Jan 1, 2025

Small business owners that haven't heard about the new Beneficial Ownership Information (BOI) reporting requirements established in 2024 and due by January 1, 2025 may want to read this blog post if they want to avoid civil and criminal penalties of up to $10,000 for missing the filing deadline. In this Blog post I'll break down what BOI reporting is, who needs to comply, and what steps you need to take to stay in line with these new requirements.

What is BOI Reporting?

The Beneficial Ownership Information reporting requirement stems from the Corporate Transparency Act (CTA), which was passed as part of the national defense authorization act in 2021. The goal of the CTA is to combat money laundering, fraud and other illicit financial activities by identifying the individuals who ultimately own or control a company. BOI reporting mandates that certain U.S. businesses disclose the individuals who own or control the company, also known as the beneficial owners. This information is maintained by the Financial Crimes Enforcement Network (FinCEN), A bureau of the U.S. Department of the Treasury.

Who Needs to Report?

The requirement applies primarily to small corporations, LLCs, and similar entities that are registered to do business in the U.S. However, some businesses may be exempt such as large operating companies that have over 5 million in gross receipts and regulated entities including banks, credit unions, and regulated investment companies.

When, What, and How to Report?

The first round of BOI reports is due within 30 days of your company's formation or registration if your company was formed or registered in 2024. If your company was formed or registered BEFORE January 1, 2024, you will need to submit your initial BOI report by January 1,2025. After the initial report, businesses will be required to update their BOI filings annually or whenever there is a change in beneficial ownership.

If your business is required to comply with the BOI rules, you will need to report specific information about your beneficial owner. A beneficial owner is generally defined as anyone who directly or indirectly owns or controls 25% or more of the company, OR has substantial control over the company (even if the don't own 25% or more). The required information includes full legal name, date of birth, current address, a unique identifying number, and a photo ID.

The reporting is done through FinCEN's online system, which is designed to securely collect and store the data, at FinCEN.gov. Once your initial filing is complete, any subsequent changes to your beneficial ownership can be updated through the same online portal. This reporting is NOT publicly available, and the data can only be accessed by authorized government agencies involved in law enforcement or national security matters.

What Happens if You Fail to File?

Failing to comply with BOI reporting requirements can result in significant penalties including fines of $500 per day. In some cases, there are criminal penalties with fines up to $10,000 and potential imprisonment for individuals who willfully provide false information.

While BOI reporting requirements may seem like another administrative burden, they are part of a broader push for financial transparency in the U.S. business ecosystem. By understanding these requirements and ensuring timely and accurate reporting, small business owners can avoid costly fines and contribute to a more transparent and secure financial system.

If you're unsure about whether your business needs to comply or if you need assistance navigating the reporting process, feel free to schedule a free consultation with me at calendly.com/integralstrategies for guidance, free of charge.